The, current credit squeeze is affecting many mortgage borrowers, in particular, those with poor credit. Borrowers who have poor credit can still obtain a mortgage, using a company that offers ‘bad credit mortgages’ as a way out of debt.

Just the expression bad credit can send people running, but there is no reason for this. In the current economic climate it is very easy for anyone to fall into the bad credit debt trap.

But even in these difficult times there are still options for people with adverse credit. It is possible you may have to pay a slightly higher fee, and the broker may have to work harder for his money. But you should be able to work around any problems, to help get you a mortgage and resolve your debt situation. To get the best results when looking for a bad credit mortgage, it is definitely advisable to engage the services of a specialist broker, as he will almost certainly get the best results for you.

This is because the specialist brokers know who to contact to make an application for a bad credit mortgage. It is essential that you are honest with the broker right from the start; if you mislead him it can only cause problems down the line. He will know how best to present your case and application to the suitable lender.

There is no reason to assume that a decent broker will not be able to help you resolve your bad debt mortgage problems and help you set your credit on the right path again.

Control your spending once you have the mortgage

Now you have a bad debt mortgage it is the best policy to try to avoid getting back into debt and repair you credit history at the same time. Most people’s wages seem to disappear without trace, you can cover the basics of may fall down as the money starts to run out at the end of the month.

The best way to deal with this problem is to set yourself a budget; most people go their entire lives without living to a set budget. But if you have had debt problems this is easily the best way to avoid it happening again.

It can be pretty scary, to set yourself limits on your spending, rather than just spending money ‘as you need to’. The first and simplest thing you need to do is make a plan, you need to know exactly how much you bring home in cash every week every month.

Next you need to list all your expenses, generally all the things you can’t get away from such as water and electricity, gas, transport and so on. Add those of the see how much they are in total. If you’re not sure, go for the highest figure you think it is.

The next thing to do is put all your other expenses into categories. This will depend how you live your life, but basically, if you eat or drink out a lot. You could put the in a luxury category.

Then, things like food and other living expenses would be categorised as necessities. You need to be realistic, with all these estimates and make sure as far as possible it is what you actually spend each month.

Now, once you have worked out more or less what you are spending in total for absolutely everything. You can figure out how to cut down on these expenses, first, consider those essentials electricity, gas and water could you save a little money on those by cutting back a little. Perhaps switching the heating half an hour before you go to bed, rather than when you go to bed.

Could you take one more shower and one less bath each per week, how about making sure that you have all your groceries in one weekly shop. Rather than making several short trips in the car each week to the local shop to pick up ‘bits and pieces’. This will save on petrol, and the cost of the things you buy.

Next consider cutting down on some of those luxuries. Instead of eating out once a week, making once a fortnight, instead of going to a drink twice a week, make it once a week. These things will add up considerable savings over the course of a month.

One last tip to help you avoid the debt trap again is to write down everything you spend, every penny. Doing this will make it very clear in your mind, just how much you are spending on individual items. Over a few months you will learn that a pound here and the pound there can definitely add up to a considerable amount of money and plunge you back into debt again.

By: Joseph Kenny

Most mortgage lenders, both national and local, have one or more programs designed to provide mortgages to people with bad credit. The fact that the borrower has bad credit suggests that there is more risk involved with lending to this person as opposed to someone with good credit. This risk is offset by lenders by charging a higher rate or interest and/or shortening the time span of the loan. It usually means that the borrower will pay more and will have larger payments covering a shorter period of time.

Potential borrowers with bad credit should first take the time to improve their credit as much as possible. The terms offered usually relates specifically to the borrower’s credit score at the time of applying and so even a slightly higher score may significantly improve the terms available. Every time a person applies for a loan, his score goes down a bit, so it is better to do as much credit improvement as possible before applying. Doing basic credit maintenance like looking for and removing errors, paying off outstanding balances and other basic credit repair should be finished several months before applying for the mortgage.

The lender will also want comprehensive documentation detailing the borrower’s current financial situation. This includes documenting the borrower’s regular income, regular expenses, current savings and assets as well as current debt. Compiling all of this information, along with all of the relevant documentation (pay stubs, tax returns, bills, etc.) saves both the lender and borrower a considerable amount of time.

The borrower should also explain why their credit is bad and document this as well. Explaining what happened and the measures being taken to correct the problem can make the difference between being approved or denied for the mortgage. If many of the problems on the borrower’s credit report relate to payment history (the history of paying in full and on time), these items can usually not be removed for seven years. However the applicant can compile a nontraditional payment history, showing that the overwhelming number of bills over a significant period of history have been paid in full and on time. This, of course, also has to be comprehensively documented but will probably be looked upon positively by the lender.

The whole idea is to convince the lender that despite having bad credit, the person applying for the loan is still a good bet. Any manner of documentation that helps convey this message to the person reviewing the mortgage application should be included. Despite the fact that most lender’s have strict guidelines on what they are willing to offer people with bad credit, explaining why the bad credit is there and showing a good faith effort to correct can impress the person reviewing the application.

By: Wendy Polisi

A County Court Judgement is an order by the courts for a creditor to repay an amount owing to a debtor. County Court Judgements, or CCJs, affect people’s credit files and will normally require the applicant to abandon standard mortgages and instead apply for bad credit mortgages.

When the order is given by the County Court, the creditor will be required to repay the debtor within a specified period of time. If this is not done, a CCJ will be recorded on the creditor’s credit file.

Having such an entry on a credit file can make it extremely difficult to obtain standard mortgages from high street lenders. Because CCJs are so common, a large number of people are unable to apply for standard mortgages.

This has lead to incredible growth in the market for bad credit mortgages in recent times.

In addition to mortgage applications being affected by outstanding CCJs appearing on a credit file, CCJs that are paid in full at a later date can remain on the credit file for up to six years. Lenders will therefore be able to see that there was once an outstanding debt despite the fact that is has since been cleared.

This means that a person may be forced to apply for bad credit mortgages several years after paying off their County Court Judgements.

Many lenders will now consider mortgage applications from people who suffer from bad credit. In fact dozens of specialist lenders that focus solely on bad credit mortgages have appeared in recent years so individuals who have bad credit will not necessarily be unable to buy a home.

Because the market for bad credit mortgages is highly specialised and many of the lenders are too small to open their own branches to the public, it may be necessary to apply for bad credit mortgages through a mortgage broker.

An independent mortgage broker will be able to search the entire market for bad credit mortgages using special software.

This can save both time and money when compared to searching for a mortgage on your own because an independent mortgage broker will have access to the entire mortgage market and will be able to find the most suitable bad credit mortgages to suit your personal situation.

By: Michael Sterios